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Administration Proposes State-Based Medi-Cal Expansion in May Revise

The Governor’s May Revise was released earlier today, which showed an additional $4.5 billion in tax revenue, a $1.1 billion reserve, proposed “an affordable and sustainable path for a state-based expansion” of the Medi-Cal program with a “commensurate shift in some responsibilities to counties,” and maintained that “preserving a strong public safety net remains a priority.”

Medi-Cal Expansion

The Administration outlined a state-based expansion of Medi-Cal:

  • Newly eligible beneficiaries will receive current Medi-Cal benefits, including county-administered specialty mental health services and county-supported substance use disorder (SUD) services
  • Long-term care will be covered, pending federal approval to retain an asset test for such services
  • Existing and new beneficiaries may receive an enhanced SUD benefit, but at county option

The budget includes $1.5 billion ($21 million General Funds, $1.5 billion federal funds) for optional Medi-Cal expansion in 2013-14, and proposes the following changes:

  • Services for pregnant women: decrease of $26.4 million by shifting eligible pregnant women with incomes between 100-200% of FPL into Covered California plans; also proposes to cover all cost sharing not covered by federal tax credits
  • Services for newly qualified immigrants (under 5 years): decrease of $5.4 million by enrolling Medi-Cal eligible newly qualified immigrants into Covered California plans; also proposes to cover all cost sharing not covered by federal tax credits

Despite greater-than-anticipated tax revenues, the updated budget does not propose restoring dental services for adults, or improving provider reimbursement rates.  Instead, the May Revise cites higher Medi-Cal costs ($467 million) due to the “federal government and courts either rejecting or delaying approval of previously adopted legislative actions” to further reduce a very lean Medi-Cal provider reimbursement rate.

County Indigent Health and the Safety Net

In addition to the state’s plan to expand the Medi-Cal program, the May Revise also addressed the 58 elephants in the room: how will this affect county funding and responsibilities to care for uninsured adults?

“The state currently dedicates about $1.5 billion annually to counties for health care, primarily for services for indigent adults – many of the same people who will move to Medi-Cal under the new law.  While the need for county indigent services will continue and preserving a safety net is a priority, the state cannot – and should not – pay for the same services twice.  Consequently, the May Revision proposes that over time, as the state takes on more responsibility for health care, counties take on more financial responsibility for certain human services programs.”

The May Revise proposes a mechanism to “determine the level of county savings based on actual experience,” where funds will be determined by measuring actual county costs for providing services to Medi-Cal and uninsured patients, and the revenues received for such services (patient care revenue, federal funds, health realignment, and net county contributions to health care services).  The difference between total revenues and total costs will govern each county’s funding future, and these savings will be used to support human services programs at the local level, including CalWORKS, CAlWORKS-related child care programs and CalFresh.

The revised budget estimates that $300 million in 2013-14, $900 million in 2014-15, and $1.3 billion in 2015-16 and 2016-17 will shift from local health programs to local human services programs.

Other HHS Program Adjustments

  • Managed care organization (MCO) tax: proposes a tax on Medi-Cal managed care plans, which will be matched with federal funds; $128.1 million General Fund savings in 2012-13, $342.9 million General Fund savings in 2013-14
  • Coordinated Care Initiative (CCI) for Medicare/Medi-Cal dual eligibles: delay demonstration from October 2013 to January 2014; $119.6 million General Fund savings in 2013-14
  • In Home Supportive Services (IHSS) reductions: after reaching an agreement with plaintiffs in the Oster and Dominguez class-action lawsuits in March 2013, the 20% across-the-board reductions will be repealed pending legislation. The settlement will require an 8% across-the-board reduction effective July 1, 2013, with a savings of $176.4 million in General Funds

The May Revision is available online.

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